US working on steel, aluminium tariff relief for Mexico, Canada

The United States is working on a plan to lift tariffs from Mexican and Canadian steel and aluminum but preserve the gains that domestic producers have received from the duties so far, US Trade Representative Robert Lighthizer said on Tuesday.

"What I'm trying to do is a have a practical solution to a real problem ... get rid of tariffs on these two, let them maintain their historic access to the US market which I think will allow us to still maintain the benefit of the steel and aluminum program," he told the US Senate Finance Committee at a hearing about the World Trade Organization.

The United States imposed the "Section 232" tariffs on steel and aluminum nearly a year ago to protect domestic producers on national security grounds. A plan to lift tariffs on the metals from Canada and Mexico was once linked to the renegotiation of the North American Free Trade Agreement but ultimately was excluded from that deal.

Since then, a number of US lawmakers have said they did not believe the new US-Mexico-Canada Agreement (USMCA) could win approval in Congress if the metals tariffs -- along with and retaliatory duties on US farm and other products -- were left in place.

Members of the New Democrat Coalition in the House of Representatives echoed a similar message in a meeting with Lighthizer later on Tuesday.

"Some of us impressed the need to resolve 232 before we have a chance to move forward" on consideration of USMCA, said Representative Ron Kind, a pro-trade Democrat from Wisconsin.

Kind added that Lighthizer expected to meet with Mexican and Canadian counterparts on the issue this week.

A spokeswoman for the US Trade Representative’s office declined to comment, saying there were no scheduling announcements on the 232 issue.

The United States has sought quotas on steel and aluminum in lieu of tariffs, but Canada and Mexico have resisted such restrictions, arguing that they pose no threat to US national security.

A Mexican official said talks were continuing.

"Our position is that we should not have tariffs or quotas. We have to help the US construct the narrative of why exclusion for Mexico is valid," added the official, who was not authorized to speak publicly on the matter and requested anonymity.

Kind cautioned that the Trump administration would need to submit the USMCA enabling legislation soon to Congress so it could be considered before the August recess. After that, it could become caught up in another border wall funding fight in the fall and later the 2020 presidential election campaign, which would diminish its approval chances.